Monthly Archives: November 2013

We recently noted that the press reports on the recent trial court’s ruling, mostly against the high speed railroad promoters, cast a menacing cloud over that project. In a nutshell the ruling put a serious block in the path of its funding, on several grounds. One reason was that the trial court thought the voters were misled when the state got their approval on some $8.6 billion worth of state bonds in 2008, but it turned out that the project, even in its reduced shape, will require a budget of some $86 billion. As we noted, this is a complex story as are the court’s rulings. So if you are interested in this tale we recommend that you read a more thorough, yet more readable account of this fiasco, which you can find in a front-page story in today’s Los Angeles Daily News.

The bottom line is that those on the side of the project’s promoters are arguing that they can still spend some $3.3 billion in federal funds, and get started on the construction, whereas the challengers disagree and contend that the federal funds may not be spent until the promoters’ financial house is put in order. “In a separate lawsuit, [the judge] also ordered the rail authority to redo its $68 billion funding plan before continuing construction.” In any event, as things stand, even under the optimistic scenario, there would be only enough money to build a railroad segment between Fresno and Bakersfield — the proverbial middle of nowhere in the Central Valley. So we will have to stay tuned on that one and await the outcome of the appeal which now appears inevitable.

Being of the pessimistic persuasion, we can’t help wondering if the Good Lord, being properly pissed off at human behavior that at times must test his patience with us, is giving things a downward nudge to get us to mend our occasionally stupid ways.

Still, things could be a lot worse than they are, so let’s give thanks for all the good stuff in our lives that still makes them enviable, and for making our country the wonderful place it is.

We hope you enjoyed your turkey and all the gastronomic and metaphorical stuff that goes with it.

With all due respect to the press, we have problems figuring out exactly what Monday’s ruling of the California trial court ruling was, regarding the legality of funding for the high-speed rail project that is supposed to link Los Angeles and San Francisco in the sweet bye and bye. So here it is, and you can do the figuring outing yourself:

“A Sacramento Superior Court judge on Monday ordered the agency building California’s high-speed rail system to rescind its original funding plan, a decision that figures to halt state bond funding for the $68 billion project until a new plan is put in place.

“But, in another ruling in the same case, Judge Michael P. Kenny refused to block the California High-Speed Rail Authority from spending the $3.4 billion in federal money it already has obtained to build an initial rail segment near Fresno.

“In a second case, Kenny declined the rail authority’s request to validate its issuance of $8 billion in bonds that California voters approved in 2008 in Proposition 1A. The ruling sets the stage for several of the project’s opponents to challenge its financing even further.”

The bottom line appears to be that the high-speed train builders can proceed with spending the federal money they received, but not the state money. Which means at best that there is going to be another delay in construction of the rail line.

As our regular readers may recall, we take a dim view of the optimism of the new urbanists who have it that American cities are on their way up. But they aren’t, except for a few empty nesters and some yuppies who move into “hip” city neighborhoods. But those are not the sort of people capable of forming a solid middle-class core around which a vital city can form and grow. For the latest — this time from St. Louis — See John Eligon, Safer Cities? Try Telling This Neighborhood. N.Y. Times, Nov. 20, 2013, at p. A1 (above the fold).

This is a long article that goes on to cover a full broadside page (p. A18) that provides a detailed and dismal picture of life in St. Louis. On p. A18, there is a map depicting the city of St. Louis, with red dots representing homicide sites. If that doesn’t turn you off on even thinking of living there, we can’t imagine what may do so. No wonder most of the city population has fled for the safety of the suburbs.

This headline says it all. See Julie Cresswell, G’Day from Bushwick, N.Y. Times, Nov. 20, 2013. The real news is that the Aussie investors are buying and renovating those houses as long-term rental investment, not just to flip them.

Don’t miss an article in today’s N.Y. Times, Bill Vlasic, Derelict in Detroit, and Hard to Sell, Nov. 22, 2013, at p. B1. Click here. It reports the misadventures of the City of Detroit in its efforts to sell the old, or more accurately what is left of the old Packard plant. It consists of 40 acres with 40 derelict buildings on them. So far, two would-be buyers had put in apparently successful bids, but neither one came up with the rest of the money — $2 million and $6 million respectively. So the county has turned to the third-highest bidder who deposited $40,000 on his $405,000 bid and has until the middle of December to come up with the rest. Stay tuned.

And while this is going on, the bankruptcy court has not yet ruled whether the city is eligible for proceeding with its bankruptcy action.

The annual Harvard Law Review Supreme Court issue that reviews the last SCOTUS term, is usually a good source of what their Lordships have done, and over the years it has faithfully reviewed taking cases as they came down. You may or may not agree with what the tads have to say, but they do cover the subject. But not this year. Which is odd because apart from the fact that there have been three significant taking cases (one of them, Koontz, a blockbuster on the subject of unconstitutional conditions) there is no mention of the subject of takings in the current SCOTUS Issue. See for yourself:

As we need not tell you, for some time now we have been hammered with the message that we should be “green,” which among other things means that we should reduce our fossil-generated electrical power consumption because that reduces carbon dioxide emissions and will stave off climate change. And one good way to do that is to reduce consumption of electrical power generated by fossil burning power plants by replacing at least some of it with solar power — you install a photovoltaic cell array on your roof and its output replaces some of the fossil-fuel power generated with fossil burning utility companies with sunlight. Not only that, your electrical bill goes down and the government subsidizes the cost of your photovoltaic array. Is that cool, or what?

Unfortunately, the first law of thermodynamics still operates and somebody has to pay for that power. As the number of photovoltaic arrays on home roofs is growing, the electrical power generating utilities have come to realize that the value of that sun-generated power (and the homeowners’ resulting savings) are coming out of the utilities’ income stream. Oops. What now?

The New York Times reports that some of the power generating companies are doing something about that, and are demanding that retail power users who use photovoltaic power pay a fee to the utilities, to make up for the revenue loss. And so in Arizona, “owners of solar panels would have to pay a new fee to power companies.” Diane Cardwell, Compromise Defers a Solar Power Fight, N.Y. Times, Nov. 16, 2013.

“The Arizona Corporation Commission [which regulates public utilities], agreed . . . and set a fixed charge [of] 70 cents per kilowatt of system capacity, to pay for it. That works out to roughly $5 a month for an average system, rather than the $40 to $50 [per] month the utility wanted, though that would have included an upfront cash subsidy.”

So what we appear to have on our hands is the sort of nonsense of yore, when Uncle Sam subsidized tobacco growers, and simultaneously demanded that people stop using tobacco products.

Don’t miss the front-page article in today’s N.Y. Times, Timothy Williams, Blighted Cities Prefer Razing To Rebuilding, Nov. 12, 2001, at p. A1. This is one of those journalistic pieces where the title says it all.

The article, though focusing on the decline of Baltimore, also takes a quick look at other cities and recognizes the inevitable conclusion that rebuilding declining American cities is a pipedream, that they have been declining for decades and continue doing so now, and notes that it would be cheaper to raze the decrepit, vacant urban buildings than to maintain them. In the meantime urban populations continue to flow out, not into the cities.

Follow up. What strikes us as noteworthy is that as of today, two days after the above NY Times story appeared, it does not appear to be picked up by other papers, or discussed on land-related blogs. Why?

Second follow up. Suspicions confirmed. Today’s N.Y. Times (11/15/13) carries two letters to the editor on the subject of this post. One is from Richard M. Daley (former mayor of Chicago, in case you need an introduction), and Karen Freeman-Wilson, mayor of Gary, one of the foremost urban basket cases of America.* The other letter is from Thomas E. Wilcox, president of something called Baltimore Community Foundation. In other words these folks have a dog in this fight, and they have it that though deindustrialized cities “are facing significant challenges, . . . [those] are not insurmountable.” As for the Baltimore dude, he assures us that “more and more residents can look forward to a comfortable lifestyle in a vital part of America.” In other words, in the sweet bye and bye there’ll be pie in the sky.

The most interesting thing is that none of these folks has anything to say about how it happened that thriving industrial American cities have been reduced to economic, civic, and social ruins. If you are an intelligent English-speaking Martian you may get the idea from reading these letters that one day the folks who constituted the population of these cities just up and left for no particular reason. Wouldn’t you think that making sure we understand how this urban calamity came about, and what role government policies played in it, would be essential if we really mean to turn the clock back and restore those cities to their once-admirable status quo ante?

Third follow up. For a gallery of pictures from Baltimore. click here . Note however that the pictures preponderate in favor of “urban farming” so we suspect that they convey an image that is better than reality would warrant.

It has been a while since we noted the progress (or the lack thereof, as the case may be) of the California high-speed train between Los Angeles and San Francisco. Now word comes from the Associated Press, via the San Jose Mercury News that

“The body overseeing plans to build California’s bullet train has started the daunting and expensive process of acquiring thousands of acres in the Central Valley, where the rail line’s proposed path would slice through farms, stores and motels.

“But months after shovels were supposed to be in the ground, the California High-Speed Rail Authority is in escrow on just one parcel of the 370 it needs to buy or seize through eminent domain for the first 30 miles of construction. The agency says it is within 30 days of reaching deals on another 38 parcels and is negotiating over hundreds of others.”

Not exactly surprising, but there it is.

As usual in eminent domain reportage this dispatch contains stuff that makes clear that its authors are not what you might call well informed.

“California’s eminent domain law limits the amount of money the rail authority can offer above the county’s assessed value.”

Not so. Compensation in eminent domain has little or nothing to do with valuation for property taxes. The constitutionally required “just compensation” in eminent domain cases is defined by statute as “fair market value” which is the highest price that would be paid by a willing but unpressured buyer to a willing but unpressured seller in a voluntary market transaction, with both parties aware of the property’s good and bad features, and giving due consideration to the property’s highest and best use (i.e., its most profitable use). See California Code of Civil Procedure Sec. 1263.320. Also, fair market value may not include any increase or decrease in value attributable to project influence or any steps taken toward its construction. Section 1263.330.

And if the taking is partial, compensation also includes the diminution in value, if any, of the remainder — the part of the subject property that is not taken.